The International Solar Alliance (ISA) will launch a $100 million fund, Global Solar Facility, that will help catalysing up to $1.5 billion in funding to expand decentralised solar power capacities across the least developed countries in Africa, where more than 700 million people have no access to electricity.
Besides, the international organisation aiming to electrify the global south is also working on creating an insurance mechanism, which will also aid in accelerating funding in poor countries.
Both the mechanisms are expected to be announced at the ISA’s first international solar festival, which is scheduled to be held on Thursday and Friday in the national capital.
ISA Director, General Ajay Mathur, emphasised that through a framework of partnerships and purpose that ties together businesses, colleges, youth, women and communities, ISA aims to unlock the full potential of solar energy, drive significant investments, and pave the way for a sustainable and vibrant future.
The festival aims to catalyse global solar adoption by forging partnerships, unlocking innovative financing, deploying cutting-edge technology and boosting capacity in ISA member countries. Aligning businesses, policymakers, and financial institutions, it will serve as a launchpad for collaborations that fast-track the world’s transition to a future powered by affordable, reliable and sustainable solar energy.
ISA was conceived as a joint effort by India and France to mobilise efforts against climate change by deploying solar power.
Global solar facility
On the solar facility, Mathur said, “Global solar facility initially focuses on decentralised systems in Africa. We are looking at a guarantee fund of $100 million, which would hopefully lead to 15 times that (funding). So, projects of about $1.5 billion could occur. At present, $39 million has been committed. I am hoping that we will get another $15 million in the next few days. At $50 million, which we will hopefully cross, we will operationalise the fund.”
Elaborating on the dynamics of the mechanism, he said that operationalisation in this case has two meanings. “This means that we will have a parent company as part of ISA. But the company is far removed from the geography. So, we don’t know what projects will come in Africa, where will finance come from or where guarantee is needed. We are in the process of selecting an African fund agency as our manager. They will get the money, they get the projects and they see where this is required. Then the parent company board either agrees with them or does not. At the festival, we will almost certainly announce the investment manager for Africa,” he added.
Insurance mechanism
Mathur said the ISA is looking at the insurance mechanism being applied with the Nuru project in Congo. ISA is talking to MIGA on a similar facility to help create insurance in least developed countries in Africa that will allow the money to flow into the solar sector.
Last year, the Multilateral Investment Guarantee Agency of the World Bank (MIGA) issued a guarantee of $50.3 million to a subsidiary of Congo Energy Solutions (CESL) to cover its equity and quasi-equity investments into Nuru SASU of Congo for setting up hybrid solar mini grids. This guarantee protects CESL against risks of expropriation, transfer restriction and war & civil disturbance for 15 years.
“On the same basis, we are getting into an agreement with the World Bank and MIGA to make this into a larger facility. An agreement between ISA and MIGA is on the cards. With the World Bank we are talking about two things. We are talking about an operational relationship in which we work on the first project of a kind. We work on technology, business models and regulations. When that is ready, the World Bank can set up programmes to upscale,” Mathur elaborated.